July 04, 2018 Has the Melbourne property market peaked?
Auction clearance rates in Melbourne have been on the wane for the best part of the year now.
So much so, they hit a five-year low last weekend, dipping under 60 percent.
If you own property, you’d be forgiven for thinking the market’s year-on-year growth would continue shooting up for the foreseeable future. It’s had an incredible run, that’s for sure.
Right now, it’s certainly a buyer’s market and, while I don’t have a crystal ball, there may be a way to go yet.
The media’s been relentless.
They’ve been hammering the notion that the Melbourne property market’s sitting on a ‘house of cards’, which certainly doesn’t help sentiment. Here, it’s important to remember your Fairfaxes and News Limiteds of the world have their own agendas – they have an insatiable need to feed their always-on news cycles.
Has the Melbourne property market peaked?
If the weekend is anything to go by, it certainly seems that way. Here, I’ll share my thoughts…
Why you shouldn’t buy into fear
Let’s say you bought into the market over the past 12 months at the potential ‘top’ – could be your dream home, could be an investment property.
If you’re a regular reader of the papers, it’s completely understandable that you might be questioning whether you got in at the right time.
I’m a big believer that there’s never a perfect time to get into the housing market, particularly if you’re buying your family’s dream home and plan to hold onto it for the foreseeable future.
Sure, there are many ways you can make or lose money in the property market. For me, though, it’s all about the long game and, as you’d expect, getting the right advice.
What you need to consider
If you’re a first-home buyer, the key is not to rush.
A buyer’s market means you have the luxury of taking your time and waiting for the right property. Chances are it might get passed in and you could well get it at the right price.
If you’re upgrading your family home, just remember that you’re going to be buying and selling in the same market. So the difference in what you buy and sell for is the key here.
Same goes for seeing a mortgage broker to ensure you know all your options and, importantly, making sure that you can afford the additional repayments.
If you’re looking at buying an investment property, on the other hand, it’s an interesting time.
It’s a given, but let the numbers be your guide.
A quality property with a good yield – great community, close to infrastructure, schools and whatnot – is always going to be a smart choice as part of a long-term investment strategy, regardless of the ups and downs.
Of course, if you buy at a lower point in the market, your yield will be higher and repayments lower. Win-win.
Ultimately, though, you should purchase property when you’re in a position to. Don’t focus on trying to time the market – or get caught up in the hype or negativity of the particular news cycle at the time.
And never underestimate the power of compounding.
If you purchase a good property in a good area, hold onto it for a long period of time and let compounding work its magic, you can’t go wrong.